Fueled by the popularity of home renovations shows on HGTV and the DIY network, home buyers are touring houses with a fresh pair of eyes and an open mind. With median home prices in Rhode Island expected to rise, younger home buyers are taking the plunge on buying fixer uppers or ‘bare bones’ homes in the hopes that their investment will be worth it in the end. J. Christopher Real Estate Group cares about getting you into your dream house and wants to ensure you take certain considerations when buying a home that needs renovations.
There is another reason why home buyers are gravitating towards fixer uppers, according to Jarrod Lewis, owner of J. Christopher Real Estate Group. “Many Rhode Island homes have been around for a long time, but homes built in the 1990s with outdated designs and features are the ones primarily saturating the market,” Lewis said.
With a team of five real estate professionals, J. Christopher Real Estate Group understands that buying a home can be complex, especially when you’re considering buying a home that needs touch ups. In order to assist you in this important milestone, we have developed a list of things to consider before making an offer.
Check ‘comps’ for the area
Home buyers that have toured homes with real estate agents have probably heard the word ‘comps’ thrown around a few times. Comps is a short word for comparable prices around the same neighborhood. Real estate agents look at prices for similar homes — square feet, number of rooms, area code, and other factors — to determine whether you are paying a comparable price. If you know how much the house should be worth if it didn’t need repairs, you can make an offer that takes into account how much you will need to pay in remodeling costs. Ideally, if homes around the area are $250,000, and you know the house needs $50,000 in repairs, then it’s not unrealistic to offer $200,000 for the home.
Know when you need a professional
Home buyers should be careful about taking on projects they aren’t capable of doing themselves. Removing carpets, installing laminate flooring, painting and changing appliances are all DIY projects in which home owners can save money. For issues that involve plumbing, electrical work or home additions, call an appropriate professional because fixes can not only be dangerous, but they can also require permits and unforeseen expenses.
Factor in other costs
Depending on the home and the type of work that needs to be done, renovations can vary from $4,000 to over $50,000. You may have budgeted appropriately, but you should also consider the costs of eating out every day if you won’t have a functioning kitchen for a month. Besides these considerations, many contractors also suggest you put aside an additional 10 to 20 percent as a financial cushion if something goes wrong during the remodeling process like having to re-pipe the entire home.
Everything is a negotiation
Home owners often fail to realize that if they didn’t get the price they wanted for a home, they can still negotiate other aspects of the deal. You can suggest a number of fixes that need to be done before buying a house, or you can ask for the down payment to be partially, and in some cases completely, paid for by the seller. If you don’t have your heart set on a particular house, and the house has been on the market for several months, you may have some leverage to negotiate a better price. Without these conditions, however, the conversation can also go the other way and the seller can choose another buyer, so be careful how you approach any deals.
There is nothing wrong with buying a home that needs a cosmetic makeover or even a significant overhaul, but before getting involved in this process consider the tips mentioned above.
J. Christopher Real Estate Group wants to ensure clients understand what’s involved when buying a home that needs renovations. Call us at 401-830-6906 to learn more tips when buying a home that needs renovations or for any other real estate issues that concern you.